What it is and how it works
Working capital can be understood as the essential capital for a company to keep running – hence the name giro. It is the amount that allows an organization to continue its operations, such as resources to bring operations to customers in term sales, resources for inventory, resources for purchases, among others.
That is, if a company does not have working capital, it simply can not continue with its activities.
Why should the company control the working capital?
When a company keeps track of its finances and working capital, it can:
- Know the best time to buy and the deadlines that can take, avoiding that there is disembedding in payments and receipts;
- Pay the short-term accounts to keep the cash positive;
- Keep asset accounts and liability accounts in proper balance;
- To meet the needs of carrying out operational activities;
- Allowing the creation of wealth in the company in the long run.
The success map for working capital
The magic word for you to have a company always on the move, fulfilling your financial obligations and projecting yourself forward in a sustainable way is: control.
If you apply control of your financial obligations, you will have no major problems. And this control can be segmented as follows:
- Cash and bank control: here is the “heart” of working capital. Where all cash receipts and withdrawals are recorded. This allows you to map paid expenses, material / inventory purchases and even estimate the organic growth of your business. The important thing is to keep the reins of the cash control, because this way you do not run the risk of discrepancies in the values and unwanted deviations of money from their original purpose.
- Control of sales and stocks: mapping this flow also helps the entrepreneur to get a macro view of the health of his working capital. With the record of sales, types of sales (spot, forward etc.), it is possible to estimate the volume to be worked on working capital in the month and with that also plan the following month in terms of estimated revenue and inventories, which may be heavier or more quiet, always depending on the financial obligations that the business has to assume.
- Accounts Payable and Receivable: Good treasury practice is also critical for you to estimate the volume of cash you are leaving and what you are planning to enter. Here it ends up being the tip of the management of the working capital since everything that registers in the accounts to pay and to have has direct impact in the financial volume available in the month.
What are the damages of having bad control of working capital?
When a company works with a low working capital, the operational difficulties increase, making the organization more subject to a negative cash – which compromises the operation of its operations.
Low working capital can mean that the company has an ineffective management of its financial planning and thus may have to resort to financial institutions borrowing and debt for the company. However, with this practice, the company owes itself in the bank and in a very unfavorable position, because it will have to move even more in the money of the cashier to pay the installments.
The best applications to control your company’s finances
1 – Expensify
This is an app that helps the entrepreneur to keep the life of your company up to date. It allows you to control everything that is sold and purchased, guaranteed to be aware of the working capital that the company has.
The best thing is that the application is free, very simple, easy and practical to operate. It is available for iOS, Android and Windows Phone operating systems, as well as offline. There is also a version with more features, but a monthly fee is charged for the use.
2 – Debt Payoff Pro
Ideal for entrepreneurs who need to control the company’s working capital, in addition to bank credit, statements, accounts payable, among other financial obligations of the organization. The application also informs accounts due dates as loans and thus prevents deadlines from being forgotten, avoiding interest and fines and helping to maintain the good health of the company.
3 – MoneyWise
It is a good app to control the financial expenses of the company, because it allows to create budgets and control the cash flow, without exceeding the limits stipulated by the entrepreneur. Avoid losing control over company accounts – which is critical to the good financial health of the organization.
The application has a Portuguese version and offers password protection. Accepts to operate with all currencies.
4 – Bills
Prevents the entrepreneur from forgetting what was bought by the company and how much it has in the reserve fund. Great app for companies of all sizes.
The application also calculates in an estimated way what your cash, based on the values that the entrepreneur has to pay and receive.
The app is free and works on iOS and Android operating systems. Have control of your company in your mother’s palm.
5 – Accounts
He is a true financial manager. With this application the entrepreneur can control expenses and revenues and also warns about receipt and payment dates – preventing the accounts from being delayed.
You can still customize categories, include multiple accounts, payment methods, and cash, card, or other means.